If you are not an accountant, financial controller or financial adviser then you may be missing out on the heightened excitement that only the end of financial year can bring. But everyone with a super account can get excited with these tips for superannuation that will have you ready to party by 30 June.
Maximise Deductible Super Contributions:
Making personal deductible contributions to your superannuation can help reduce your taxable income as well as increasing your super balance. If you add to your superannuation as a voluntary contribution over what your employer puts in, you are eligible for a tax deduction of the amount contributed up to the concessional cap (currently $30,000). You’ll be adding extra to your retirement fund and you’ll be doubly rewarded when you submit your tax return. If you’re going to make an extra contribution to superannuation and want to claim the tax deduction, don’t forget to lodge a notification with your super fund to let them know you want to claim the contribution in your tax return. The contribution and the notification are best lodged in early June to make sure they are in by the end of the financial year, and you’ll need to be under age 67 or still employed to make the claim.
Catch-Up Concessional Contributions:
If you haven’t been contributing up to that concessional cap every year, then you might have a few years of catch-up contributions available. If your superannuation balance is under $500,000 it’s worth checking your ATO details on MyGov to see if you can add a little extra for an even larger tax deduction. Catch-up contributions are on a five year rolling basis, so extra contributions this year will use up the oldest unused portion of your catch-up allowance. If you’ve made extra money this year by selling property or shares, and you’re under age 67 or still employed, adding some of your extra funds to your superannuation this way might help offset the higher tax you’d otherwise pay on the increased earnings.
Spouse Contribution Splitting:
If your spouse doesn’t earn as much as you, they’ll likely be receiving less from their employer in superannuation too. If your own super contributions are higher, you can choose to share your concessional contributions with them to help boost their super balance. You can split up to 85% of your concessional contributions and transfer them to your spouse’s super fund. You don’t get any additional tax deductions from moving the funds across, but this strategy can help equalize your super balances and potentially maximise the amount invested in tax-free income when you retire. If you want to take advantage of this strategy, you must opt to split the previous financial year’s contributions before 30 June of each year, and your spouse needs to be under 65 and not yet retired.
Timing it Right
Super funds have a lot of work to do in June to get everyone’s last contributions banked and allocated to their accounts, so it’s important to ensure that you get your contribution or split request in on time. Getting it done by 13 June at the latest means you won’t be disappointed by a delayed bank transfer, or an error on a form that needs to be resubmitted. Make sure you receive confirmation from your fund that everything has been received and actioned in time.
Now you can get excited by the end of the financial year and take advantage of these opportunities to super-charge your superannuation, ready for a brilliant start on 1 July.
